The luxury handbag maker also gave a disappointing revenue forecast for fiscal 2015.

The New York-based luxury handbag maker is planning to close about 70 underperforming stores in fiscal 2015 as it tries to make its business more competitive with fast-growing rivals. The retailer also gave a disappointing revenue forecast for fiscal 2015.

Its shares tumbled to their lowest level in more than three years in afternoon trading.

Coach Inc., which also makes accessories, footwear and other items, is grappling with weakness in its North American handbag and accessories market as consumers increasingly flock to rivals such as Michael Kors Holdings Ltd., which has been quick to churn out trendy designs. But the latest report shows that the slump will continue for a while.

CEO Victor Luis told investors and analysts Thursday that the chain is at a crossroads and hasn't responded effectively to competition.

He said Coach will implement a number of major initiatives over the next 12 to 18 months, such as reducing promotional levels, rolling out new advertising, closing stores and changing its product offerings.

"The bottom line is that a turnaround here is going to take a long time," said Randal Konik, an analyst at Jefferies in a published note. "Competition is fiercer than ever," which he says will continue to weigh on sales and profits.

Even as Coach shutters underperforming stores, Mr. Luis said the chain will rebuild in its top 12 flagship markets in North America, which generate strong sales and have high customer traffic. He said the chain will also broaden its position in U.S. department stores.

According to its website, Coach had over 500 Coach stores in North America as of last July. It also operates Coach boutiques within department stores and specialty retail locations in North America. It also operates overseas.

Coach cautioned that it anticipates a low double-digit revenue drop in fiscal 2015. Its North American sales at stores open at least a year are expected to decline by a high teens percentage.

Shares of Coach fell $3.81, or 9.7%, to $35.38 in afternoon trading. The stock slid to $35 earlier in the session, its lowest point since July 2010.

As part of its efforts to branch out to other products, Coach has been building its men's business. The company's new shoe assortment launched during March in more than 170 stores in North America and 60 company-operated stores internationally.